THE Department of Finance (DoF) urged the Insurance Commission (IC) to enhance its protection measures for consumers by building on the reforms and improving its regulatory capacity to avoid a repeat of the “ugly episodes” in the past when several pre-need companies failed in succession.
In his remarks at the agency’s recently concluded 68th anniversary celebration, Finance Secretary Carlos Dominguez 3rd also called on the Commission to gear up for an insurance industry boom, which is expected to come about under the Duterte administration.
“We have gone through ugly episodes in the past. One particularly troublesome episode was when several pre-need companies failed in succession. We have yet to arrive at a final verdict on whether these failures were due to bad management of the providers or bad policy on the part of government,” he said.
“At any rate, thousands of consumers, paying premiums with their hard-earned money, lost their valuable savings. That injury should not happen again,” he told IC officials and employees led by newly appointed Commissioner Dennis Funa.
Dominguez was referring to the near collapse of the pre-need industry over a decade ago, which was triggered by a law lifting the cap on school tuition fees. This made it difficult for many local pre-need firms, which sell mostly education plans, to meet the burgeoning costs of their maturing contracts.
“I am sure that because of the reforms instituted by the Insurance Commission and better regulatory capacity, the chances for failure have been dramatically diminished,” Dominguez said.
“We have to build on these reforms. We have to rebuild the faith of our people on companies that sell them insurance or pre-need products. That is always a challenging job, to be sure. But I have faith that the Insurance Commission will perform its regulatory role abiding by the highest standards,” he said.
The Commission must also ensure that insurance companies provide their clients with fairly priced premiums, he said.
“When premiums are overcharged, the cost of the products could be pushed beyond the reach of most consumers who need the protection these products otherwise bring,” Dominguez said.
He advised the Commission to look into the insurance coverage offered for vehicles and residential properties supported by the PAG-IBIG Fund that often involve “unreasonable premiums.”
“Insurance and pre-need industries are inherently risk-based businesses. They also involve arcane actuarial computations not readily clear to consumers patronizing these businesses. By merely tweaking on these actuarial computations, huge profits could be made at the expense of consumers,” Dominguez said.